Restore My Credit

Saturday, August 18, 2007

The world of electronic banking and other associated electronic fund transfers is growing. Credit cards are world wide and very popular, they will probably be slowly replaced by some kind of card which comes directly out of your account. We can see this already with Instant Cash cards, which deduct directly from your checking account.

Many people find cash to be more dangerous than credit cards. They are right to some extent. Cash is easily stolen with no hope of return and it can be hard to keep track of where it gets spent. Credit cards give you insurance and an itemized bill is sent to you every month, which makes credit cards very easy for book keeping and safe to use, right? Some people find comfort in not having an electronic trace of what they purchase every day. “As payment systems usingelectronic checking become more pervasive, is it necessary to sacrifice the privacy and undocumentability associated with cash?” (Patiwat Panurch).

When you go the appliance store and wish to purchase a brand new 42’’ TV, all you have to do is whip out that piece of plastic that has a shiny symbol that says “Visa” on it, the cashier swipes it through a little electronic machine, you sign your name, and you now have new TV. WOW!

So, are you fully in control of your money? It’s a scary thought isn’t it? People in today’s world tend to just go with the flow with out even asking “what about…”. Personal bankruptcy is at an all time high. Maybe, having cards that deducted directly from your bank account, people would not spend money they don’t have.

Thursday, August 16, 2007

Here's how the new bankruptcy legislation approved Thursday by Congress really should have been crafted.

In exchange for banks, credit card companies and retailers getting a tough law that will force more consumers to pay more of their debts in bankruptcy, lenders should have agreed to a cap on the insane volume of direct-mail credit card solicitations they dump on consumers.

Somehow, that idea was never considered. But it seems only fair. If President Bush signs another probusiness piece of legislation to plump credit card industry profits, then the card business should stop supersaturating American households swimming in debt.

Don't e-mail me arguing that "if people were more personally responsible they would not be overwhelmed with debt." I agree, to a point. But Congress ignored the facts that more people get into credit trouble because of lost jobs, huge medical bills and other hard-to-anticipate problems than do people who just can't stop spending at the mall.

A study conducted by doctors at Harvard Medical School and published in the February issue of Health Affairs found that half of bankruptcies, involving 700,000 American households and affecting more than 2-million people annually, are attributable to illness or medical debt.

It's really a two-way street. If consumers need to show more discipline, so do the providers of credit. That's why this biggest rewrite of the bankruptcy code in 25 years is so one-sided and flawed.

How fitting this matter should fall on April 15, our national deadline to pay taxes. A survey by the Cambridge Consumer Credit Index finds that 11 percent of Americans this year will borrow money on their credit cards to pay their tax bill. That's up from 3 percent who used credit cards in 2004.

The credit card industry's aggressive strategy over the past 20 years was to give everyone multiple credit cards. It's a big reason U.S. consumers became hooked on consumption and completely lost the ability to save.

Credit card solicitations have doubled to 5-billion a year. That's about 18 credit card solicitations for every man, woman and child in the United States. And the solicitations are getting bolder in pursuit of the vulnerable.

Seniors, including those who learned to shun debt in the Depression, are a rapidly expanding market for credit cards. The big lure? Paying for expensive prescription drugs on credit.

Minors younger than 18, with no incomes and no credit history, are targeted as an emerging market for the credit industry. College-age students, besieged with credit offers and high tuition bills, on average leave school (often without a job offer) with $18,900 in student loans and an average $3,262 in credit card debt.

Look for 1.5-trillion payment cards in the United States by the end of this year.

When was the last time you applied for a credit card and were turned down? What the industry has created is a dependency on easy credit.

The parallel to drug addiction is not farfetched. Now hooked, more consumers can be squeezed for more money. Even in bankruptcy.

The new bankruptcy legislation is not all bad. It probably will catch some perennial deadbeats in its wide filters. But it will hurt many more consumers with legitimate need of bankruptcy protection along the way.

Professor Elizabeth Warren teaches bankruptcy law at Harvard Law School and has written extensively about the rising financial, social and political pressures undermining the U.S. middle class.

She points out that a million men and women each year turn to bankruptcy in the aftermath of a serious medical problem, even though 75 percent of them have health insurance.

She says a family with children is nearly three times more likely to file for bankruptcy than an individual or couple with no children.

She notes that more children live through their parents' bankruptcy than through their parents' divorce.

And Warren warns it is women who disproportionately will bear the brunt of higher costs, more restrictions and less protection from the legislation. Women are the largest demographic group in bankruptcy, outnumbering men by about 150,000 per year.

Rep. David Dreier, R-Calif., praised the legislation because it would allegedly save American families an average $400 a year in higher interest rates now charged to consumers to recoup losses from those who abuse bankruptcy proceedings.

That's laughable.

Sure, there might be some modest amount of money saved from fewer bankruptcies. But who really believes the kindhearted credit card industry will take those savings and, in place of higher profits, return it to consumers in the form of lower interest rates?

WASHINGTON - Growing consumer unease with credit card practices is fueling a call for action as lawmakers and regulators debate making changes.

For the first time since 1980, the Federal Reserve Board is considering major revisions to the clarity and content of credit card disclosures so consumers can better understand the terms of their cards and make more informed decisions about using them.

The Fed also is reviewing the effectiveness of consumer protections against unfair card practices and inaccurate billing in the wake of unprecedented growth in credit card usage and public outcry over rising interest rates and penalties along with costly, abrupt changes in card agreements.

The Fed recently sought public comment on a number of issues, including whether to make card disclosures more consistent so comparison shopping is easier, the costly trend of allowing borrowers to be over their credit limits for multiple billing cycles, whether minimum monthly payments should be raised so consumers would pay off their card debt more quickly and whether cards should provide more information about the cost of making only the minimum payments.

According to CardWeb, an online research firm, average household credit-card debt has more than tripled, from $2,966 in 1990 to $9,312 in 2004. If a family made the minimum 2 percent payment on that $9,312 at a 16 percent interest rate, it would take more than 43 years to pay off the balance - at a total cost of $27,265.44. Of that amount, nearly $18,000 is interest.

Possible recommendations by the Fed, which could include calls for congressional action, aren't expected until next year. It's unclear in what direction the agency might go.

"Trying to guess what they'll do is like trying to figure out who the College of Cardinals is going to pick as pope. It's virtually impossible," said Travis Plunkett, the legislative director for the Consumer Federation of America.

Nessa Feddis, senior counsel for the American Bankers Association, said the card industry was getting a bad rap from a small group of "vociferous" cardholders and consumer advocates: "Everybody likes to pick on credit cards because they're such a successful product."

Most cardholders, 55 percent, pay off their balances at the end of each month, Feddis said. More than 90 percent make their payments on time, she added, noting that those who complain about tough card terms have only themselves to blame for managing their money poorly.

Based on consumers' comments to the Fed, it's clear that many consumers think credit card companies are taking advantage of borrowers who don't fully understand the terms of their cards and feel powerless to contest changes when they're made.

"The people who are getting ripped off can't even understand what the hell is being written on the back of their statements. They should just have it in the clearest possible language and not in a complicated chain of words," said Brad Hoffman, a 25-year-old mortgage loan officer from Philadelphia who wrote to federal regulators urging them to address the problem.

Others, such as Derek Addams of Providence, R.I., told regulators of high fees on one of his cards and said the interest rate on another jumped from 17 percent to 28 percent in two months despite a "flawless payment history."

William Ridlon of Portland, Maine, complained about getting unsolicited credit card checks "sometimes two or three times a month."

"It's almost as bad as cocaine dealers trying to get you hooked, but on credit instead of drugs," Ridlon wrote. "We're not treated as valued customers, we're treated as money sponges that the credit card companies find new ways to squeeze every few months."

Those concerns found a sympathetic ear in Congress recently when several members of the Senate Committee on Banking, Housing and Urban Affairs said they also had trouble understanding their card disclosure forms.

"A magnifying glass and an attorney should not be necessary to understand a credit card agreement," Sen. Elizabeth Dole, R-N.C., testified at the hearing May 17.

Credit card industry officials, who have long complained of too many regulations, say the disclosures are fine as they are.

"We're not talking about a complicated product," said Feddis of the bankers' association. "There may be ways to improve it, but the basic model is very good. What we really need to do is some better consumer education," so that people know what to look for and where, she said.

Nevertheless, Sen. Christopher Dodd, D-Conn., the committee's ranking minority member, said high-interest credit cards were "nothing less than wallet-sized predatory loans" and warned that sentiment for congressional action was "building and building."

But Plunkett said the Republican-controlled Congress was unlikely this year to pass proposals by Dodd or Sen. Dianne Feinstein, D-Calif., that addressed complaints about credit cards.

He said committee Chairman Richard Shelby, R-Ala., kept his promise to conduct the hearing, which he made earlier this year during debate on bankruptcy legislation. It was the second oversight hearing on possible credit card abuses that he could recall in his six years of working on the issue.

Plunkett agreed sentiment for congressional action is growing but said it might take several years to build bipartisan support for meaningful legislation.

In the meantime, the Fed's possible call for change appears to be the most immediate source for revisions. But the industry is resisting.

A frustrated Donald L. Nightengale, the senior vice president for retail banking at First National Bank, North Platte, Neb., gave the Fed a tongue-lashing for even considering more credit card regulations.

"Did it ever occur to you nincompoops that the part (consumers) don't understand is the thousands of words of regu-babble you so ridiculously refer to as disclosures?

"A Ph.D. would have a hard time understanding the overcomplicated idiotic procedures you have forced on the banking industry in your usual misguided and pathetic attempt to legislate illegality out of existence."

Clearly, Nightengale had second thoughts afterward.

In a later note to the Fed, he apologized for the "tone and style" of his earlier comments, noting that they were "personal" and didn't represent the perspective of his employer.

He wrote: "I deeply regret the embarrassment I have caused those organizations and the fine people they employ."

Wednesday, August 15, 2007

Q. I received an email saying that my computer was infected with many forms of spyware and I needed to download a "free" locating device. Once it was through scanning it popped up with an unbelievable number of infections. After trying to remove them all it said I needed to purchase something. The spyware that was found on my computer is said to give anyone access to what I look at online, my emails, who I chat with, and even credit card numbers and other personal information like that. Should I purchase this spyware remover or should I just pass it off as a scamcrystal, charlotte nc 10/03/03

A. Crystal -- I’d pass on this offer. A good rule of thumb is not to respond to unsolicited e-mails. If you think you might have spyware, look at getting AdAware or SpyBot. Both are free and can be downloaded at www.download.com.Andrew Shain 10/03/03

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Q. I've seen commercials suggesting that one of the ways to protect against identity theft is to do a periodic check on your personal credit rating. What's the best way to do that? I'm leary of those web sites offering a free report.Anonymous, Old Fort, NC 10/02/03

Q. I am trying to clean my credit report. I know that after 7 years bad debt is cleared off of the report. Does the 7 year contdown start when the creditor is paid in full or when the a/c was closed? Does charge-offs clear after 7 years?Anonymous 9/30/03

A. Charge-offs clear seven years after the "last activity" listed on your credit report, according to Equifax. The last activity was most likely the date when the creditor charged-off the final amount you owed them. One wrinkle: If your debt was sent to a collector, they can keep a record on your credit report for seven years from the date of when they agency first took over your debt, Equifax said.Andrew Shain 10/01/03

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Q. Bob ... Several years ago, I was the victim of credit fraud. The person who victimized me was an employee of the mortgage firm who gave me the loan on my home. The FBI became involved in the investigation, but in the end stated they could do nothing because there was no "video evidence" of this crime. What did law enforcement do before video surveillance was available?Deb Jordan, Charlotte, North Carolina 9/30/03

A. Deb -- ID theft is a difficult crime for authorities to make arrests and win prosecutions. They have to prove a suspect was the one who registered for a credit card in your name at the store or was at the computer keyboard when ordering those goods from a Web site using your passwords or was the person who accessed customer information from a company database. Video is a good proof. Otherwise, they try to follow a paper trail along to catch ID thieves.Andrew Shain 10/01/03

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Q. Hi, I'm in the process of trying to find a job, and i've noticed that a lot of places are doing credit checks. How is this legal? and what does it have to do with getting a job? also, i do have bad credit because of being unemployed, do i have any recourse with getting a job with this credit problem? Lastly, is there any place that doesn't do a credit check? Thanksstephen, charlotte, NC 8/02/04

A. Stephen, Credit checks have become a staple for some employers when hiring. They are legal. Some businesses check credit histories because jobs involve handling money and employers want to see how you handle yours. Others check your credit because they believe people with poor histories might not be reliable employees. Employers should tell you if your credit history is the reason why they didn't hire you. If you have poor credit, consider mentioning that up front and explain why. Some businesses might be willing to look past your poor credit if you're honest about it. Good luck with the job hunt.Andrew Shain 8/02/04

Tuesday, August 14, 2007

Q. I purchased a car from an auction (VA) and arranged financing for the vehicle with a finance company (CO) associated with the auction. The term was 2 years and I paid the vehicle off early even though it was no longer running (vehicle was donated). Years past and I went to finance something else and the car transaction showed up on my credit as “unpaid.” I contacted the finance company and they asked me for proof that I had insurance on the car. I no longer had the insurance papers as proof since years had passed. The finance company was/is charging me for “forced place insurance” on a vehicle that had already been paid for (and they list the car as paid for). We're unable to get anywhere. First question, Is this legal? Secondly, this occurred 7 years ago. What is the statute of limits for negative items on a credit report? Last, but not least, how might I deal with a charge like this and an uncooperative creditor? Thank you, 1st JaguarAnonymous, Charlotte, NC 7/12/04

A. 1st Jaguar -- Seven years from the last active transaction is the limitation for negative information on a credit report. I would write letters the credit bureaus explaining the discrepancy about the car payment, including proof that you paid off the loans. In the meantime, you should be able to get insurance records from the company you used for insurance in the past, if that's all the finance company needs. If the finance company won't back down, file a complaint with the Better Business Bureau and state consumer protection office in Colorado.Andrew Shain 7/12/04

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Q. I have been getting phone calls from Waterloo, Iowa, a collection agency for Direct Television Inc. I am also being sued by DTV (as are 100 thousand or more people in the US) claiming I bought a Technology Avancement Device off the Internet. Now this collection agency says I bought a DTV Receiver and I did not have it activated, so now I need to pay them $150. I refuse since I did not buy this Product, and they say it will ruin my credit if I don't pay. I have asked for Proof that I bought it, and if I did, I will gladly pay them - but I know I haven't. And they just keep calling and saying they will ruin my credit history. What can I do to stop them. I am at a point to just pay them and get it over with - but if that happens, I'll be sending them 15000 penny's in a wooden box. Thanks in advance for any advice.Nautilas2004, Louisiana 5/15/04

A. Collection agencies must show you proof of your debt. They also are not allowed to threaten you and must stop contacting you at your request. You can file a complaint with the Federal Trade Commission and the Louisiana Attorney General's office.Andrew Shain 5/17/04

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Q. When I went to the Mecklenburg County Tax Office to pay my vehicle fee, I discovered that I was out of checks; I was handed a sheet with a graduated schedule of "convenience fees" if I chose to pay with a credit card. To my astonishment, I saw that I would have had to pay $16 just for the privilege of using my credit card which already charges me interest! At the highest listed payment, one could be charged this additional fee of nearly $2,200. I am flabbergasted that one of our public officials was given the authority to choose a company (Official Payments Corp.) that processes these fees. This appears, to me, to be a flagrantly irresponsible decision made on behalf of Mecklenburg County's taxpayers.Ted, Charlotte 5/11/04

A. Ted, County officials said in April they are considering a new credit-card payment system that does not require high convenience fees. Official Payments does not get any money from the county for handling credit payments. The company makes money from the fees changed taxpayers.Andrew Shain 5/12/04

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Q. Received an e-mail from " Dark Profits.Com. with an e-mail address. It is headed as "Important Notice". To Quote,"We have just charged your credit card for money laundry service in amount of $234.65 (because you are either child pornogrophy webmaster or deal with dirty money which require us to layndry (sic)then send to your checking account) If you feel this transaction was made by our mistake, please press "No". If you confirm this transaction, please press "Yes" and fill in the form below. It has 2 boxes for filling in credit info. Can something be done about this obvious fraud attemp? This is the second time I've gotten one of these. I have SpyBot, which caught it. I can forward this to you, if you would like. A response would be appreciated.John Lambert, Harrisburg, NC 10/10/03

A. John -- You received a piece of spam (unsolicited commercial e-mail) that's going around the country. There's not much you can do except click "delete." Never provide personal financial information in response to an unsolicited call, e-mail, mailing, etc. A popular scam lately has been e-mails that appear to come from legitimate businesses (Bank of America, Best Buy, eBay) asking consumers to confirm account information. If you get an e-mail like this, call the company to confirm the message. Or you can just click delete.Andrew Shain 10/13/03

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Q. My roommate keeps getting calls from creditors regarding a "private label account." He swears he's taken care of it. These calls have really began to disrupt the lives of myself and my other roommate. Is there anything I can do to get them to stop calling? The only response I've gotten from them is "you should tell your roommate to be more responsible with his finances." Thanks for the help!Anonymous 10/06/03

A. If the debt has been repaid, get a letter from the creditors saying so. If the calls continue, I'd use the letter as evidence when filing complaints with the Federal Trade Commission and N.C. Attorney General's office. (For contact information, see my "Consumer Resource Guide" on my Web page)

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Q. I am receiving threatening, harassing phone calls from a collection agency concerning a debt with Direct TV. A Direct TV representative applied charges to the incorrect account. This was verified by a Direct TV supervisor in a telephone conversation with me. My account with them was closed in May 2002. This charge was applied in May 2003 and is related to an address in another state no less. A telephone call with a Direct TV supervisor was supposed to have corrected this problem but we are still receiving harrassing calls from the collection agency. How can I correct this problem? How do I check to see if this went against my credit rating? What follow-up recourse do I have? Thank youRobert, Kannapolis, N.C. 10/05/03

A. Robert -- I suggest getting a letter from DirectTV, saying the debt no longer exists and send a copy to the collection agency. If their calls don't cease after that, file complaints with the N.C. Attorney General's office and the Federal Trade Commission. (You can find numbers for both in my "Consumer Resource Guide" on my Web page.

Q. Hello - I have had a family emergency (a death) and have fallen behing on my debts as a result. At this point, I'm so far behind that bankruptcy is the only solution for me. My credit is already score is bad as a result of the late payment history, which in the past was always very good. Will I always have bad credit as a result of filing for bankruptcy? Will I ever be able to get a house of my own?Lee, Charlotte, NC 3/16/04

A. A bankruptcy will remain on your credit history for 10 years. Depending on the lender and your recent payment/employment history, you should have a chance to get a house several years after the filing, though expect to pay a high interest rate.Andrew Shain 3/29/04

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Q. Fifteen years ago, I had some trouble paying off some credit card debt. I had some charge offs and late pays but cleared everything up...or so I thought. My parents recently received a letter addressed to me from a collection agency on behalf of a company with whom I used to have a credit card. They want payment for a $400 outstanding balance. I check my credit regularly with all three agencies and it hasn't appeared for at least 8 years. The SSN is correct on the letter but I don't have any records to verify the amount. What should I do?? If I pay it, it will have a new Date of Last Activity and start showing up on my credit report. Why couldn't they find me years ago?? I've never hid from any creditors. If fact, I'm married and a home owner (very easy to locate).Anonymous, Charlotte, NC 2/18/04

A. If the debt was charged-off by the credit-card company, a collection agency can ask you to voluntarily pay the money at any time. Even though nothing appears on your credit record, the debt still exists. (The charge off remained on your credit record for seven years.) If the debt is that old, send a notice to the collector to stop contacting you and ignore further requests. If you promise to make payments, they collection agency could start legal proceedings against you if you fail to follow through.Andrew Shain 3/23/04

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Q. I'M HAVING A PROBLEM WITH A CREDIT CARD COMPANY CALLING ME AT WORK THAT I'M BEHIND ON MY BILL. I KNOW THAT I AM BUT AT THE COMPANY I WORK FOR I'M NOT ALLOWED TO GET THESE CALLS AND I'VE TOLD THESE PEOPLE THAT. I COULD LOOSE MY JOB IF THEY KEEP CALLING. WHO DO I CONTACT TO GET THEM TO STOP. COULD YOU PLEASE GIVE ME A SIGHT TO GO TOO.JACKIE, SANFORD,NC 1/08/04

A. Debt collectors are allowed to call you at the office, but must stop if they have a way to reach you during non-work hours or they know your employer disapproves of the calls, the N.C. Attornet General's office said. If you have a complaint about a debt collector, call the N.C. Attorney General's office at (877) 5NO-SCAM or (919) 716-6000.Andrew Shain 3/09/04

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Q. The guy that I was previously dating asked me to rent a car for him (he did not have a credit card) and that he would pay me the cash. I rented the car in my name. Over the course of 4 weeks, he paid me $300 of a $750 bill. We have since broken up. Is there any possibility of my recovering the unpaid money?Anonymous, Chicago, Illinois 2/18/04

A. Not sure there's much you can do except keep asking him for the money. You could take him to small claims court for the remaining $450. You can represent yourself, but there are fees that might eat into the cash you're seeking. For more information, visit http://www.statesattorney.org/aweb/confbbb.htm.Andrew Shain 2/19/04

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Q. Hi - I have a lot of credit card debt and it's starting to get overwhelming. How much of an adverse effect will using the services of a credit counseling service have on my credit report, which is otherwise good. I have never been late nor missed a payment.Douglas, Charlotte 10/30/03

A. As long as you're current on your accounts, using a counseling service will not hurt your credit score with most groups, say credit-rating bureau Experian. Still, some creditors might consider you more of a risk when you apply for loans or credit cards. You can always add a statement to your credit record to explain the circumstances for using a counselor.Andrew Shain 11/04/03

Nelly Perry went to massage school convinced she could avoid the tens of thousands in loans her friends amassed at traditional universities.

She followed the advice of counselors at two schools, borrowing more than $12,000. The process was so easy that she applied for one loan over the phone. But, unlike her friends' loans from the federal government, Perry's came from private lenders charging interest rates of between 8.5 percent and 13.5 percent. Plus, the loan terms required repayment while she was still in school.

"I got overwhelmed," said Perry, 27. When loan collectors began harassing her about missed payments, she moved back home to Milwaukie, Ore., and sought help from a credit counselor. "You feel like there's a ton of bricks on you. You feel like you can't breathe."

With the cost of higher education skyrocketing and federal student loans capped at 1992 levels, more students are turning to private loans to pay for trade schools and even traditional colleges. The loans are the fastest-growing type of student aid, and lenders are scurrying to cash in on the highly profitable products, offering easy online access or jockeying to get on a school's list of preferred lenders.

The trend alarms financial aid advisers who fear students are unwittingly taking on too much debt. Some, like Perry, eventually fail to repay the loans on time. That trend could worsen if interest rates continue to rise.

In addition, regulators are investigating allegations that some trade schools and their lenders have not adequately informed students about the high interest rates and extra finance charges. Authorities in Oregon, California and Pennsylvania this year probed the recruiting and financial aid practices of trade schools owned by Illinois-based Career Education Corp. The investigations follow complaints from students who said they did not know they were taking out loans with 15 percent interest rates.

Career Education Corp. has said it is cooperating with Pennsylvania investigators but calls allegations by California regulators "grossly exaggerated." Lenders say they follow federal disclosure laws and maintain students simply aren't carefully reading loan disclosures. Nonetheless, the loans worry educators and regulators.

"I've seen interest rates as high as 26.5 percent," said Deborah Godfrey, head of the closed schools and student-tuition-recovery-fund unit at the California Bureau for Private Postsecondary and Vocational Education. "Unfortunately, students are very, very, very poor consumers."

Students are resorting to private loans partly out of necessity. Since the early 1980s, college tuition has risen twice as fast as inflation, yet Congress has not changed the maximum a first- or second-year student can borrow since 1992.

As a result, private loan activity grew nearly eightfold between the 1995-96 and 2003-04 school years, according to a College Board survey, from $1.3 billion to $10.6 billion. Private loans now represent about 9 percent of all student financial aid, the College Board says.

Lenders say a growing number of students don't fit traditional molds that the federal loan program envisions. Forty percent of students attend school part time, up from 28 percent in 1970, said Melissa Bassett, executive vice president of Student Capital Corp., a company launched in June to market private student loans. Other students borrow to attend trade schools that either don't qualify to receive federal aid or charge more than $30,000 per program, far in excess of the annual federal loan limits.

Federal student loans currently carry interest rates of between 4.7 percent and 6.1 percent. The government can raise them in the future, but never higher than 9 percent.

Federal loans are typically more flexible, offering students a chance to postpone repayment if they return to school, lose their job or fall into financial trouble. They also can be consolidated, after borrowers graduate, into one payment. And federal rules require that applicants be verbally counseled about the loans' interest rates and terms of repayment.

Private student loans, on the other hand, carry adjustable interest rates with no caps. Their finance rates usually start at prime rate, now 6.5 percent, and add zero to 6 percentage points or more, depending on the student's credit rating and whether a relative will co-sign for the loan.